Constitutional Court upholds legal ban of the “best price” clause
11/17/2017 - Reading time: 1 minutes
The dispute between the European Commission and Intel regarding the EUR 1.06 billion fine – at the time a record-breaking amount imposed on any single company – has been going on since 2009 and is now entering a new round: The judgment handed down by the European Court of Justice (ECJ) marks a rewriting of the rules for fines in anti-trust proceedings.
Since early 2017, internet booking platforms have been prohibited by law to demand from hotels and guest houses to not offer a more favourable price on their websites or for bookings made by other distribution channels (ban of the ‘best-price’ clause). This immediately caused booking platforms opposing such regulation to resort to the Austrian Constitutional Court (VfGH). Now the Constitutional Court clearly dismissed the attempt of booking.com to bring down the legal provision.
The company had argued that the ban of best price clauses violated the fundamental rights of enjoying unimpaired property and the freedom to work and conduct a business and the principle of equality. The Constitutional Court did not follow such reasoning.
The Court regarded the regulations provided in the Federal Act Against Unfair Competition and in the Price Marking Act to be adequate and objectively justified and dismissed the motion brought by the platform, explaining in its statement of reasons that ‘the regulations objected to are appropriate means of achieving the objective sought by the legislator, namely to secure free competition and thereby safeguard consumer interests.’ Furthermore, there was no evidence, according to the Constitutional Court, of any less severe means which the legislator could have used instead of imposing a ban of such clauses.
Nor did the Constitutional Court follow the reproach that the true objective aimed at by the provisions was to protect hotels and guest houses against business rivals. The Court stated that the legislator was pursuing the public interest in securing fair and free conditions for competition between booking platforms and hotels and guest houses. Furthermore, there was no business rivalry between booking platforms on the one hand and hotels and guest houses on the other hand.
The decision of the Constitutional Court has a direct impact on numerous other distribution systems which would have wished the proceedings to confirm their ‘best price’ clauses. It is strongly advised to review such practices. Given the preservation of the legal regulation, it is all the more necessary to address the issue of such clauses’ admissibility under anti-trust law.